Moody's puts CorpBanca on upgrade review after Itau deal
SANTIAGO Jan 31 (Reuters) - Moody's Investors Service put the ratings of CorpBanca on review for upgrade, following Brazilian bank Itau Unibanco's deal to acquire control of the Chilean bank.
The ratings agency, which had downgraded CorpBanca in December to Baa3 from Baa2, said on Friday that the proposed merger could have a beneficial effect on CorpBanca's funding flexibility, margins, and capital, and also strengthen its market presence.
CorpBanca and Itau announced the deal, valued at an estimated $3.7 billion, on Tuesday. Itau is seeking a bigger footprint in Chile and Colombia, while CorpBanca, Chile's fifth-largest bank, is looking to scale up.
In December Moody's had cited fears about the read-across impact on CorpBanca of problems at linked retail business SMU, both of which are controlled by Chilean billionaire Alvaro Saieh via his CorpGroup empire.
The unlisted SMU has been scrambling to get its affairs in order since last July, when it revealed accounting errors that pushed CorpBanca shares to an all-time low. In November Saieh injected $300 million into SMU, which runs supermarket group Unimarc.
SMU has now sealed a long-term debt refinancing with its banks, SMU said in a separate statement on Friday. (Reporting by Rosalba O'Brien; Editing by Meredith Mazzilli)
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